PRI won’t advise investors on Israel

The United Nations-backed Principles for Responsible Investing (PRI) initiative will not advise its members to divest from holdings in Israeli banks, following increasing pressure from institutional investors on these banks over their financing of settlements in Palestinian-occupied territories.

The UN views the Israeli settlements as a breach of international human rights laws, a position which has caused a number of European pension funds – including the $465 billion Dutch pension fund ABP, the $200 billion Scandinavian fund house Nordea Investment Management and $90 billion Norwegian fund group DNB Asset Management – to engage with the banks over their financing.

But the banks are required by Israeli law to finance the settlements and this situation resulted earlier this month in the first large institutional investor, the Dutch pension fund PGGM, to divest its holdings in five large Israeli banks: Bank Hapoalim, Bank Leumi, First International Bank of Israel, Israel Discount Bank and Mizrahi Tefahot.

The measure caused controversy and Israel summoned the Dutch ambassador to object to the pension fund’s decision.

Despite the UN position on the matter, the PRI will not give its members guidance as it does not advise on individual cases.

“The issue you have here does not meet the industry criteria, but could conceivably fit the specific company criteria if we felt that the actions of the banks in question show that they are not managing their ‘social’ risk appropriately.”